Kids Web Japan

Q. Japan's trade surplus is sometimes talked about internationally. Why is this?

A.

From around the middle of the 1970s, Japan began to develop chronic trade surpluses as exports outstripped imports. The trade surplus, which reached its peak in 1992, declined until 1996 when the surplus was only 54 percent of its peak figure. Then it began to expand again in the 1997, but it began to decline from 1999 through 2001. In 2005 the surplus hit ¥8.71 trillion ($79 bilion at a rate of ¥110 to the dollar), the first time in four years that the trade surplus decreased.

Many countries have run up trade deficits with Japan. Mindful of the negative impact on domestic industry that chronic large trade deficits can have, the United States and some other countries have demanded from time to time that Japan reduce its surplus, and Japan has placed voluntary ceilings on exports of certain manufactured items.

Japan is working to reduce the surplus by implementing various import-promotion policies in the belief that a reduction will contribute to the healthy development of the global economy. For instance, a government-affiliated organization that promotes imports dispatches staff overseas and provides information to help foreign companies export to Japan.

Japanese manufacturers of such products as electronic equipment and cars are moving production facilities overseas, moreover, to offset the costs of the stronger yen -- which is a result of Japan's large trade surplus to begin with. In 2004, overseas investment topped $31.0 billion.

As a result, many items that used to be exported are now being produced in overseas markets. And there has been an increase in imports of manufactured goods and parts, whose prices have dropped with the yen's appreciation.